Corrective Match - This one's easy?

[Just Me]

Employee enrolls for 401(k) plan last year. Deferrals start, then due to glitch, they stop for several pay periods. Company making QNEC for missed deferral contributions. Company also making related match. Is the related match a QNEC? EPCRS says it is if the employee was not "provided an opportunity to make elective deferrals". He was. But on the other hand he wasn't.

[J Simmons]

I think he was offered the opportunity. He made an election for the period in question, it simply wasn't implemented. If not given an opportunity to make an election, the match is treated as a QNEC. Here, the employee's deferral desires were known through the election. The match should be a match.

[Just Me]

It seems clear that if you forget to offer participation entirely, under EPCRS the correction is for the employer to contribute deferral and match, both of which are a QNEC.

This doesn't seem to apply to our situation. However, EPCRS does not specifically address the situation where the participant made an election and we didn't follow it...so is there any support for treating the corrective deferral as a QNEC (which I think is the right answer), and is there any guidance on whether the corrective match would or would not be a QNEC (I get mixed answers from my colleagues on this point)? What has everyone else done under VCP?

[QDROphile]

Why do you care if it is to be treated as a QNEC?

[pmacduff]

FWIW - we just had an IRS audit on a safe harbor plan. The corrective 401(k) deferrals and match were both deposited as QNEC per the auditor. I know the auditors can have different methods but this guy has been doing audits a long time...

[Just Me]

Why do you care if it is to be treated as a QNEC?

Under this plan, QNECs cannot be withdrawn in service, whereas matching contributions can. Match is also subject to a three year vesting schedule, whereas QNEC is not. It makes a difference or we wouldn't be worrying about it.